* Federal Reserve Chairwoman Janet Yellen has argued consistently in recent months that labor markets are abundant with slack that will hold inflation and wages down. But she hasn't convinced all her colleagues. Minutes of the Fed's April 29-30 policy meeting showed a lengthy debate on this subject and suggested labor-market slack will become an important battleground in the central bank's coming discussions about how long to continue its low-interest-rate policies. (http://r.reuters.com/pyj59v)

* Goldman Sachs Group Inc is ceding most of its ground on the New York Stock Exchange's trading floor. IMC Financial Markets, a Dutch high-speed trading firm, agreed on Wednesday to acquire Goldman's rights to operate as a designated market maker in more than 600 New York Stock Exchange-listed stocks, according to Scott Knudsen, IMC's Chicago-based head of trading. IMC will also hire about 15 floor brokers from the Wall Street firm. (http://r.reuters.com/tyj59v)

* Reynolds American Inc and Lorillard Inc are in advanced talks to combine in a deal that would dramatically reshape the U.S. tobacco landscape, creating a powerful No. 2 to industry leader Altria Group Inc, according to a person familiar with the matter. (http://r.reuters.com/vyj59v)

* The claws are out for the entire board of Darden Restaurants Inc after it agreed last week to sell its Red Lobster chain. Starboard Value LP, an activist investor that didn't want Darden to sell Red Lobster alone, is now launching a fight to take over the board, according to people familiar with the matter. (http://r.reuters.com/xyj59v)

* EBay Inc on Wednesday asked the 145 million registered users of its namesake marketplace to change their passwords following a cyber attack that compromised a database containing encrypted passwords and other data. (http://r.reuters.com/zyj59v)

* Three days after AstraZeneca PLC slammed the door on Pfizer Inc's latest $120 billion takeover offer, some big investors in the British drugs giant are refusing to give up. AstraZeneca's sixth-largest investor, Legal & General Group PLC, is urging the company's board to reverse its rejection of the deal, two people familiar with the situation said. (http://r.reuters.com/fak59v)

FT

The Financial Conduct Authority succeeded in overturning a lower court decision on UK legal aid. The Court of Appeal ruled that a complex fraud trial could go ahead despite defendants being unable to find legal representation.

Shareholders in Italy's Monte dei Paschi di Siena approved a proposal to boost the size of an upcoming share sale to 5 billion euros ($6.9 billion) to help it absorb a hit on its finances it expects from a Europe-wide bank health check.

Hedge fund Magnetar Capital is suing U.S. drugs wholesaler McKesson Corp, saying its acquisition of German peer Celesio was unfair to minority shareholders.

Tesco Plc, UK's biggest grocer, banned sweets and chocolates from checkouts in all of its stores as health campaigners crack down on sugary food items.

Netflix is pushing into Europe this year, the U.S. video streaming company said on Wednesday, as the company launches its service in Germany, France, Belgium, Switzerland and Austria by the end of 2014.

NYT

* China is going to great lengths to satisfy its growing hunger for energy to fuel its expanding car fleet and electrify its swelling cities. The Chinese government showed that desire on Wednesday when it reached a 30-year natural gas deal with Russia, even as China was locked in a tense standoff with Vietnam over a Chinese oil rig drilling in the contested South China Sea. (http://r.reuters.com/quj59v)

* JD.com Inc, an online retailer aspiring to become China's answer to Amazon.com Inc, exceeded expectations for its initial public offering on Wednesday, raising $1.78 billion. Even though the company has lost money for the last several years, its stock sale valued the company at $25.7 billion, a valuation even higher than Twitter Inc's at its market debut last fall. (http://r.reuters.com/tuj59v)

* One of the prime assets that the estate of the bankrupt Lehman Brothers Holdings Inc still has to sell is a 20 percent stake in the $22 billion hedge fund D. E. Shaw. But so far, Lehman has found no takers. Over the last six months, the Lehman estate has been trying to drum up interest in the stake, which the Wall Street bank bought a year before it collapsed. But few investment firms solicited by the Goldman Sachs Group Inc bankers who are shopping it have shown much interest in what is one of the industry's more successful trading firms. (http://r.reuters.com/zuj59v)

* Airbnb, the apartment sharing service, and New York law enforcement officials came to an agreement Wednesday after a dispute over rental data that lasted for the better part of a year. Under the terms of the deal, Eric Schneiderman, the New York State attorney general, will get the information he is seeking about Airbnb hosts in New York City, but it will be stripped of names and other personally identifiable information. (http://r.reuters.com/byj59v)

* Investment firm Starboard Value is seeking to unseat Darden Restaurants Inc's entire 12-member board, people briefed on the matter said on Wednesday. The move comes after the restaurant operator announced plans last week to sell Red Lobster to Golden Gate Capital, a private- equity firm, for about $2.1 billion. Both Starboard and another hedge fund, Barington Capital Group, fiercely criticized the deal as a "firesale" that shortchanged them and other investors. (http://r.reuters.com/cyj59v)

Canada

THE GLOBE AND MAIL

* Ontario's New Democratic Party Leader Andrea Horwath is expected to promise a family caregiver tax credit when she unveils her platform Thursday morning. The credit, which would provide C$1,275 annually to people caring for an ill or aging family member at home, is part of Horwath's attempt to position the NDP as the party of the "middle class," in a bid to broaden its base of support. (http://r.reuters.com/wam59v)

* In his first address to the National Assembly as Quebec's premier, Philippe Couillard warned tough times are ahead as Quebec seeks to put its financial house in order. In the end, the sacrifice will pay off though with more jobs and lower taxes, he promised. (http://r.reuters.com/bem59v)

Reports in the business section:

* The single biggest customer for the new Bombardier Inc C Series airplane, Republic Airways Holdings Inc, is raising doubts about whether it still wants the aircraft, another potential blow to Bombardier's attempt to carve out a profitable niche in the biggest segment of the large commercial airplane market. (http://r.reuters.com/fem59v)

NATIONAL POST

* After weeks of speculations, former Federal Minister Jim Prentice announced his intention to replace Alison Redford as the Leader of the Progressive Conservative Association of Alberta, and Premier of Alberta. (http://r.reuters.com/hem59v)

* Canadian Prime Minister Stephen Harper feared he might have to step aside in 2008 if a police investigation occurred into allegations his Conservative team had tried to bribe Independent Member of Parliament Chuck Cadman, a new book says. (http://r.reuters.com/kem59v)

FINANCIAL POST

* Chief Executive of Malaysia's Petroliam Nasional Bhd said the state-run energy giant will not proceed with a planned liquefied natural gas export terminal proposed for Canada's West Coast at all costs, even as the company eyes a potential final investment decision on the plant by year-end. (http://r.reuters.com/mem59v)

* As the list grows of investment dealers rejecting compensation awards recommended for their clients by Canada's independent banking ombudsman, an investor advisory panel is calling on the Ontario Securities Commission to step in and make the compensation binding. (http://r.reuters.com/nem59v)

Hong Kong

SOUTH CHINA MORNING POST

-- Mainland internet giant Tencent Holdings Ltd emerged as the world's fastest-growing brand this year and surpassed China Mobile as the most valuable in Asia, according to the latest BrandZ Global Top 100 study. (link.reuters.com/syh59v)

-- Advertising spending is going mobile, with a recent research report showing Chinese consumers are more receptive of mobile advertising than those in Britain and the United States. The report forecasts China's mobile advertising will reach 12.5 billion yuan ($2.01 billion) this year and swell to 25.7 billion yuan in 2017. (link.reuters.com/tyh59v)

-- The maiden flight of China's first large commercial passenger jet, the C919, has been delayed until the end of next year, with planes expected to be delivered to buyers in 2018, a senior official at its state-owned manufacturer Commercial Aircraft Corp of China said. (link.reuters.com/vyh59v)

THE STANDARD

-- The MTR Corp said part of the construction work for the South Island Line East is delayed, in another embarrassing admission by the railway operator. (link.reuters.com/wyh59v)

-- A bill to exempt the Macau chief executive from criminal liability during his term of office will be passed into law in Macau next week - after it sailed through a committee at Macau's Legislative Assembly on Wednesday. (link.reuters.com/zyh59v)

-- China Everbright said its state-owned parent China Everbright Group is waiting for the State Council to approve an internal restructuring ahead of a listing of the whole group. (link.reuters.com/caj59v)

HONG KONG ECONOMIC JOURNAL

-- Demand for service apartment with monthly rental of over HK$100,000 ($12,900) is seen weakening in Hong Kong as many international corporations trim their overseas staff housing subsidies, and that boost demand for smaller apartment with monthly rental of HK$80,000, according to real estates service firm Jones Lang LaSalle.

HONG KONG ECONOMIC TIMES

-- U.S. apparel brand J.Crew, which opened three stores in London last year as it kicked off its overseas expansion plan, has recently opened two stores in Hong Kong's Central business district and it plans to add three more in the city in the next two years to tap the local market, according to its Chief Executive Millard Drexler.

MING PAO DAILY NEWS

-- Hong Kong-based watch retailer Oriental Watch Holdings Ltd said it expects to report a "substantially lower profit" for the year ended March 2014 due to a slowdown in China economy and an increase in shop rents, while high-end luxury menswear retailer Trinity Ltd saw no improvement in operating environment in China due to the ongoing anti-corruption campaign.

The British oil major said on Wednesday that it would ask the United States' highest court to revise a catch-all compensation deal it struck in 2012, which is being used to award payouts to people "with no apparent connection to the Deepwater Horizon spill".

Letters seen by The Telegraph show Halfords Group asking suppliers to pay up to 10 percent of their annual sales with the retailer in what effectively amounts to a rebate on already agreed contractual payments.

AstraZeneca's directors remained defiant on Wednesday night in the face of calls from one of the drugs company's biggest shareholders to reopen talks with its unwanted suitor, the U.S.-based Pfizer group.

TIMING OF MORTGAGE RATE RISE LOOKS LESS CERTAIN AFTER BANK OF ENGLAND MEETING

All nine members of the Monetary Policy Committee voted in favour of keeping rates on hold this month, but the minutes of the meeting showed that, for some, the policy decision was becoming "more balanced".

Two of the world's biggest private-equity groups Blackstone and TPG have joined forces to mount a takeover bid for Kensington, one of the UK's biggest specialist mortgage lenders.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:Jobless claims for week of May 17 at 8:30--consensus 310KMarkit manufacturing PMI for May at 9:45--consensus 55.5Leading indicators for April at 10:00--consensus up 0.4%Existing home sales for April at 10:00--consensus up 2.2% to 4.69M rate

ANALYST RESEARCH

Upgrades

Booz Allen (BAH) upgraded to Buy from Hold at StifelFacebook (FB) upgraded to Overweight from Equal Weight at EvercoreNabors Industries (NBR) upgraded to Buy from Hold at JefferiesReinsurance Group (RGA) upgraded to Outperform from Market Perform at Raymond JamesRenasant (RNST) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

American Eagle (AEO) downgraded to Sell from Neutral at CitigroupArcelorMittal (MT) downgraded to Sell from Neutral at GoldmanArcos Dorados (ARCO) downgraded to Neutral from Overweight at HSBCKeurig Green Mountain (GMCR) downgraded to Neutral from Buy at Roth CapitalMedAssets (MDAS) downgraded to Neutral from Buy at BofA/MerrillMosaic (MOS) downgraded to Neutral from Outperform at MacquarieMotorola Solutions (MSI) downgraded to Underperform from Neutral at MizuhoSTMicroelectronics (STM) downgraded to Underweight from Neutral at HSBCSodaStream (SODA) downgraded to Underweight from Equalweight at Barclays

Initiations

AES Corp. (AES) initiated with an Equal Weight at Morgan StanleyAT&T (T) initiated with a Market Perform at BernsteinCF Industries (CF) initiated with a Neutral at UBSCenturyLink (CTL) initiated with a Market Perform at BernsteinChina Biologic (CBPO) initiated with a Buy at JefferiesFirst Quantum Minerals (FQVLF) initiated with an Underweight at HSBCFrontier Communications (FTR) initiated with a Market Perform at BernsteinSeabridge Gold (SA) initiated with a Speculative Buy at CanaccordSprint (S) initiated with a Market Perform at BernsteinT-Mobile (TMUS)initiated with a Market Perform at BernsteinVerizon (VZ) initiated with an Outperform at BernsteinWindstream (WIN) initiated with an Outperform at Bernstein

COMPANY NEWS

Unilever (UN, UL) agreed to sell Ragu, Bertolli brands to Mizkan Group for $2.15BSears (SHLD) said it continues to evaluate options to separate Sears Auto Center businessAllergan (AGN) responded to Pershing that it is 'well aware of its fiduciary duties'The Consumer Product Safety Commission announced that Nest Labs (GOOG) would recall 440,000 smoke alarms to repair a feature can prevent the alarm from immediately soundingSanchez Energy (SN) said it would acquire 106K continuous net acres in Eagle Ford trend of South Texas from wholly-owned subsidiaries of Royal Dutch Shell (RDS.A) for approximately $639M in cashLINN Energy (LINE) signed a definitive agreement to trade a portion of its Permian Basin properties to Exxon Mobil (XOM) and its wholly owned subsidiary XTO Energy for operating interests in the Hugoton BasinChina Precision Steel (CPSL) announced delisting from NADSAQ